Mobile payment innovation : developing countries may lead the charge

The Daily Stat: Even the Very Poorest Like Mobile Banking http://s.hbr.org/8YDwHo

You would assume that, for sure, people in Indonesia would be happy to use their mobile for making payments as it would be convenient. But wait a minute … are you able to make payments from your mobile through SMS ? Can you do other transactions? Most likely not, whereas 8 Million people In Kenya do mobile payment through M-Pesa. The next innovation in mobile payment will be most likely coming from developing countries.

Let’s take a couple of lines to explain why this would actually makes sense. Drawing a parallel between innovation and evolution (if you live in Texas, there is a probability this might not resonate too much with you). An arsh environment is a good ground for innovative, out of the box adaptation : if you live at the ocean floor, you end up living on methane through several microorganisms instead of light and oxygen. Let’s take financial services in so called third world countries, they face critical challenges for the “regular” banking system :
– Lack of infrastructure
– A lower disposable income per people
– A limited communication network (except increasingly mobile)
– Instability

If you are a classic brick and mortar bank with the ATM/Credit Card combo as a paradox, chances are you will not survive. However if you are a flexible company with a knack for innovative solutions, you may come up with great ideas such as :

– M-Pesa from Kenya originally which allows people to makes and receive payments without having a bank account. They can also makes or received deposits with authorized retailers or airtime resellers. M-Pesa is managed by Safaricom, a network operator which does not have a banking licence.
– Cashsend, from Absa bank in South Africa, allows their clients to send money to anyone (with a bank account or not) through an SMS which allows the receiver to withdraw the requested amount from an ATM using the code provided.
– Nokia Money, officially launched in 2010 after being tested in India.

If you are like me, you find these ideas interesting and would use some of them. Even more if you are part of the 7.7% of unbanked households in the US (around 9 millions). This is why some key players have emerged on the US market:
– Obopay: founded by Carol L Reani, who realized, while doing humanitarian work in Africa, that prepaid mobiles use could be the ground basis for a different financial services infrastructure. A detailed interview of Carol L Reani can be found here. Obopay has received funding from Nokia.
– Rêv Worldwide recently announced that it will expand to North America, to serve the unbanked market. It specializes in prepaid card, mobile payments. It is already active in India, Eastern Europe and Latine America.

Sources:
http://www.newscientist.com/article/mg20527485.300-who-needs-banks-if-you-have-a-mobile-phone.html
http://www.theeastafrican.co.ke/business/-/2560/870450/-/item/0/-/pc0n4x/-/index.html
http://www.monitor.co.ug/Business/Business%20Power/-/688616/866896/-/item/0/-/13jy46sz/-/index.html
http://www.revworldwide.com/news/pr/pr_03092010.php

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